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TX Holdings Announces It Has Successfully Reached an Agreement to Consolidate and Restructure Certain Outstanding Indebtedness Due to Its Chairman and CEO

ASHLAND, KY--(Marketwired - Feb 28, 2014) - TX Holdings, Inc. (OTCQB: TXHG), a supplier of mining and rail products to the U.S. coal mining industry, today announced that it has successfully negotiated and, on February 25, 2014, entered into an agreement with Mr. William "Buck" Shrewsbury, the company's chairman and CEO, to consolidate and restructure certain outstanding indebtedness due to Mr. Shrewsbury, including an agreement to extend the term of such indebtedness.

Under the terms of the consolidation and restructuring agreements, the company agreed to consolidate the following indebtedness due to Mr. Shrewsbury: the principal due under a Revolving Promissory Demand Note issued on April 30, 2012, in the amount of $1.062 million, and accrued but unpaid interest under the note of $168,905 due as of January 31, 2014; the principal due under a 10% Promissory Note issued February 27, 2009, in the amount $289,997, and accrued but unpaid interest under the note of $93,252 due as of January 31, 2014; and certain advances previously made by Mr. Shrewsbury and due as of January 31, 2014, in the amount of $385,846.

In exchange and replacement for such indebtedness, the company issued to Mr. Shrewsbury a new Consolidated Secured Promissory Note in the principal amount of $2 million.

The Revolving Promissory Demand Note and 10% Promissory Note that were cancelled in the transaction had each been subject to payment on demand and had born interest at the rates of 5% and 10% per annum, respectively. The advances previously made by Mr. Shrewsbury had been noninterest bearing and due on demand. As part of the consolidation transaction, Mr. Shrewsbury waived and released the company from prior defaults under such notes.

The new Consolidated Secured Promissory Note, including interest, is due and payable 10 years from the date of issuance but may be accelerated upon the occurrence of an event of default. The new note bears interest at the rate of 5% per annum, except that if the prime rate of interest as reported by the Wall Street Journal exceeds 5%, then the new note will bear interest at the prime rate reported by the Wall Street Journal. The new note is to be secured by the proceeds of a $2 million key man insurance policy to be purchased on the life of Mr. Shrewsbury. The new note contains events of default, including bankruptcy of the company, appointment of a receiver for the company, default with regard to other indebtedness by the company, a judgment against the company in excess of $250,000, the sale of all or substantially all of the company's assets or a change in control of the company, the company's dissolution, upon the occurrence of Mr. Shrewsbury's death, or upon the company's failure to pay premiums under the key man insurance policy.

In consideration of his agreement to effect the debt consolidation and restructuring, the company issued to Mr. Shrewsbury options to purchase 500,000 shares of the company's common stock. The options become exercisable April 1, 2014, and remain exercisable for a period of three years at an exercise price of $0.0924 per share, subject to certain anti-dilution adjustments.

The terms of the debt consolidation and restructuring were reviewed and approved by a special committee of disinterested directors of the company.

The terms of the consolidation and restructuring were reported by the company in a Form 8-K filed with the SEC on February 28, 2014, and reference should be made to such report for a more detailed discussion of the transaction.

Forward-Looking and Cautionary Statements Except for the historical information and discussions contained herein, statements contained in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (PSLRA) and other applicable law. When used, the words "believe", "anticipate", "estimate", "project", "should", "expect", "plan", "assume" and similar expressions that do not relate solely to historical matters identify forward-looking statements. Forward-looking statements are based on the company's current assumptions regarding future business and financial performance. Forward-looking statements concerning future plans or results are necessarily only estimates and actual results could differ materially from expectations. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including the following: our ability to implement our business strategy; our financial strategy; a downturn in economic environment; our failure to meet growth and productivity objectives; a failure of our innovation initiatives; risks from investing in growth opportunities; fluctuations in financial results and purchases; the impact of local legal, economic, political and health conditions; adverse effects from environmental matters and tax matters; ineffective internal controls; our use of accounting estimates; our ability to attract and retain key personnel and our reliance on critical skills; impact of relationships with critical suppliers; currency fluctuations and customer financing risks; the impact of changes in market liquidity conditions and customer credit risk on receivables; our reliance on third party distribution channels; Securities and Exchange Commission regulations related to trading in "penny stocks;" the continued availability of certain financing provided by our CEO; and other risks, uncertainties and factors discussed in our Quarterly Reports on Form10-Q, our Annual Reports on Form 10-K, and in our other filings with the SEC or in materials incorporated therein by reference. Any forward-looking statement in this release speaks only as of the date on which it is made. We assume no obligation to update or revise any forward-looking statement. Notwithstanding the above, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, expressly state that the safe harbor for forward looking statements does not apply to companies that issue penny stocks. Because we may from time to time be considered to be an issuer of penny stock, the safe harbor for forward looking statements under the PSLRA may not be apply to us at certain times.


William "Buck" Shrewsbury
Chairman and CEO
TX Holdings, Inc.
(606) 928-1131